Week 2 & 3

Private and Commercial Law

Codes for private and commercial legal relations

 The civil code

- code of law v. Handbook (usage based on voluntary submission)

- extended promulgation by increased use by all Indonesians

- partially annulled by national law

 The commercial code

- extended promulgation by increased use by all Indonesians

- partially annulled by national law

 Extensive influence, especially via OTW-rules of compliance

Indonesian Civil code

(Kitab Undang-undang Hukum Perdata)

 Based on the Dutch civil code

 The classification in the civil code

- book one: On person and family

- Book two: On Assets

- book three: On Contracts

- book four: On evidence and prescription

Indonesian Commercial Code

 Based on the Dutch civil code

 art. 1 Indonesian Commercial code:

- "The civil code I applicable to commercial matter, in so far, as it has not been specially deviated from in
this code"
Contract law in Indonesia

 adat contract law

- source of law: Adat law of indigenous people of Indonesia

 "Western" contract law

- source of law: Book 3 on contracts of the civil code

Principles of Adat law

1. no distinction between real and personal rights

2. No distinction between movable and immovable property/goods
3. No distinction between public and private law
4. No distinction between civil and criminal depicts

Why the BW (civil code but in Dutch) contract law?

 Prof. Sudargo Gautama:

- Adat contract law is primarily meant to serve the needs of a closed, rural community, not engaged in
world commerce

- this rural Adat in its pure form is ill-suited for international globalization of commerce and trade

- as a result it is commerce in Indonesia today to assume that the civil and commercial codes, not Adat
contract law, are applicable to (native) Indonesians engaged in international businesses

Civil code obligations (perikatan):

Indonesian: "Perikatan, lahir karena suatu persetujuan atau karena undang-undang"

English: "All obligations arise either from agreements or law"

Definition of agreement: an agreement is an act pursuant to which one or more individuals bind
themselves to one another

Elements of the contract

 Consent of the parties

 Capacity to contract
 Certain/specific object
 Lawful/admissible purpose
Consent of parties

 Agreement to bind oneself to a contract and only valid if it is made under no duress, fraud,
mistake

◊ mistake(art. 1322 BW) : on the identity on the subject matter and the identity of the person
◊ duress (art 1323 -27 BW): any mental intimidation that forces a party to give their consent
◊ Fraud (ar. 1328 BW): false statement accompanied by a deceitful act that leads the other party to
reach a wrong conclusion

Capacity to contract (art. 1329 BW)

 anyone may undertake an agreement if by law he has not been declared incompetent
 Exceptions: minors, persons under guardianship

Certain/specific object

 An agreement shall have as a subject a matter which shall be stipulated according to its nature the
quantity of the matter may be uncertain, unless such quantity can be stipulated or determined at
a later date. (1333 BW)
 Only matters that can be traded can be the subject of agreements (1332 BW

Lawful/admissible purpose
 Any agreement without cause, or concluded pursuant to a fraudulent or implausible cause, shall
not be enforceable (1334 BW)
 A cause is not permissible if it is prohibited by law, or if it violates good conduct, or public order
(1337 BW)

Division of goods in the civil code:

1. Registered goods and unregistered goods
2. Tradable goods and non-tradable goods
3. Tangible good and intangible goods
4. Movable goods and immovable goods

Elements of a contract

 Article 1320 BW:

o Subjective requirements
 Consent of the parties
 Capacity to contract
o Material requirements
 A certain/specific subject
 A lawful purpose
 Voidable if the subjective requirements are not satisfied
 Null and void if the material requirements are not satisfied
Relation between contract and obligation

 Contract/agreement creates obligation to the parties

 Contract/agreement is one of the sources of obligation.
 Art. 1233 BW:
o “all obligations are created either by agreement or by law”
Legal effect of a contract

 A legally executed contract shall bind the parties to the contract. They cannot be revokes
otherwise than by mutual agreement. The shall be executed in good faith (1338 BW)
 Agreements shall only be enforceable between the parties involved. They shall not be detrimental
to third parties; third parties shall not profit from them (1340 BW)
Force Majeure (overmacht)

 is a condition that occurs after the agreement made, which hinders the one party to the contract to
fulfill his obligation, in which the he/she cannot be questioned and he /she does not have to bear
the risk and may not suspect at the time the approval is made.
 Terminates the contract and obligations of the parties.
 “An Event of Force Majeure shall mean any event or circumstance not within the reasonable
control, directly or indirectly, of the affected Party, but only if and to the extent that (i) such
circumstance, despite the exercise of reasonable diligence, cannot be or be caused to be
prevented, avoided or removed by such Party, (ii) such Party has taken all reasonable
precautions, due care and reasonable alternative measures concerning arbitration, provided that,
as to any dispute concerning the payment of money, the undisputed amount of such payment shall
be paid as and when due.”
Breach of contract
A state of non-performance of a contract due to errors/omissions of the parties or one party.

 Types of Breach of Contract:

o Do not conduct the obligation as agreed in the contract
o Conduct the obligation, but not as agreed (imperfect)
o Conduct the obligation, but not on schedule
o Conduct something that should not be done according to the contract.
 Effect:
o o Cost:
 Any expense that has been paid by the other party.
o Damage:
 Any loss due to damage to property belongs to the other party resulting from the
negligence of the breacher.
o Interest:
 Any loss in the form of lost profits which already paid by the other party to the
contract.
Obligation to use bahasa indonesia
Law No. 24 of 2009 on Flag, Language, Symbol of State and National Anthem
“The Indonesian language shall be used in a memorandum of understanding or an agreement) which
involve a state institution, a government institution, a private Indonesian entity or an Indonesian citizen.”
Expiration of Contract (ps.1381 BW)
1. By the completion of obligation by the parties;
2. By the application of termination requirements;
3. By the agreement of the parties.
Relation of the Civil Code and the Commercial Code
Art. 1 Commercial Code

 Insofar as there are no special deviations in this Code in comparison to the Civil Code, the Civil
Code shall also be applicable to matters discussed in this Code.
 KitabUndang-Undang Hukum Perdata, seberapa jauh daripadanya dalam Kitab ini tidak khusus
diadakan penyimpangan-penyimpangan, berlaku juga terhadap hal-hal yang dibicarakan dalam
Kitab ini.
 Lex specialis derogat lex generalis.